In this article, David Sharpe KC and Jake Loomes consider the recent decisions on breaches of the Premier League’s Profit and Sustainability Rules.

Two recent financial fair play decisions concerning Everton Football Club (‘Everton’) and Nottingham Forest Football Club (‘Nottingham Forest’) have resulted in a six-point (reduced from ten on appeal) and a four-point reduction respectively. Such sanctions have put both teams at dire risk of relegation. Aside from heartache to Everton and Nottingham Forest fans alike, the potential financial consequence of relegation from the Premier League has been estimated at £100 million per annum. ([20] of Everton Football Club Company Limited v The Football Association Premier League Limited [2024] (‘the Everton Appeal’). The link to the Everton Appeal decision can be found here. The link to the Nottingham Forest decision can be found here.

Notwithstanding pending changes to financial regulation proposed by the Premier League, the decisions are likely to have significant implications for the approach taken to the outstanding charges against Manchester City Football Club.

Financial Fair Play Rules and the Profit and Sustainably Rules – what are they and why do they matter?

The Premier League’s Profit and Sustainability Rules (‘PSR’) dictate how much a single club is permitted to lose over a period of three years. In short, a club is allowed to lose a maximum of up to £105 million over three seasons. That maximum may be lower in circumstances where the club is either recently promoted and/or is unable to obtain secured funding. Every Premier League club agrees to be bound by the PSR when they join the league.

The driving force behind the PSR is the European Footballing Association (‘UEFA’)’s Financial Fair Play (‘FFP’) principles. The FFP’s focus is broadly twofold.

Firstly, to ensure that clubs operate within their means, striving towards breaking even rather than incurring potentially unsustainable levels of debt. Such policy is designed to avoid situations whereby clubs go into administration as happened to Portsmouth Football Club in 2010.

Secondly, to strengthen the competitive balance between clubs. That is to say, place limits on clubs spending grossly disproportionate amounts to their revenue in order to try and secure a premium squad. By way of example, in the Everton case, the CEO of the Premier League, Richard Masters, gave evidence which suggested that the annual squad cost value of a single Premier League point was £5 million [215].

The loss calculation is in accordance with agreed accounting rules set out in the PSR. The calculations do not include certain costs which are associated with investment in, amongst other things, women’s football and youth development football.

A breach of the maximum limit will result in an automatic referral to the Commission. Given that liability is strict, the club’s rationale for exceeding the limit is irrelevant. Intention and repeated non-compliance are, however, relevant when determining sanction.

The Everton Case


  • In 2016, Mr Ardavan Moshiri purchased 49.9% of the shares in Everton, over the years he invested heavily in the club. He presently owns 94% of the club.
  • In the 2021-2022 season, Everton breached the PSR by accruing losses of £124.5 million.
  • As there was a breach of the £105 million maximum (rule E.51), the Premier League were obligated to refer the breach to a Premier League Commission (‘the Commission’).
  • That Commission imposed an immediate sanction of a ten-point deduction in its decision on 17 December 2023.
  • Everton appealed the sanction (but not the breach) on 9 separate grounds to an appeal board (‘the Appeal Board’).


The Appeal Board upheld the appeal on two grounds, these were that:

  • The Commission erred in concluding that Everton had been “less than frank” and in doing so, breached another Premier League rule, (B.15) which imposes an obligation of “upmost good faith”; and
  • The Commission erred in failing to take into account the available benchmarks from English Football League (‘EFL’) guideline cases when considering proportionality of sanctions.

As the errors were material, it fell to the Appeal Board to set aside the ten-point sanction and re-assess the appropriate sanction.

In doing so, the Appeal Board considered what was a proportionate sanction, taking into account mitigating and aggravating factors and the underlying aims of the PSR.

The Appeal Board set out its view of the correct approach to making that assessment. It held a six-point deduction was appropriate. In doing so, it set out a number of key considerations that it applied to the case.

  1. Any sanction imposed must be proportionate, i.e. no more than necessary to achieving the aims of the PSR [194].
  2. Whilst sanctions may result in severe adverse consequences, they are not necessarily punitive, “their primary purpose is to protect the integrity of the relevant competition by restricting the level of financial risk a club might take, in the case of the PL, to a level and in the manner in which the PL clubs agree” [199].
  3. Any breach of the £105 million limit “warrants a points deduction, and nothing less than a points deduction” [201], save for where there is, as presently undefined, “particular powerful mitigation” [206].
  4. The extent to which a club exceeds the maximum limit is an obvious aggravating factor. This is in a similar way as to how two drivers exceeding a 30mph speed limit, one by 30 mph, and, the other by 5mph, will both be in breach, but, one will attract a greater likely sentence [85].
  5. Unforeseeable specific events (sanctions against Russia or the loss of a player due to suspension for gross misconduct) which increase losses are unlikely to attract much (if any) mitigation given that prudent financial planning allows for contingent risks which should be properly guarded against [104 & 109].
  6. It is no defence that a club did not do as well as hoped to rebut the inference that a club in breach of the rules obtained a ‘sporting advantage’ from overspending [150(ii)]. Whilst the inference of sporting advantage is not irrebuttable, it is seemingly a high bar.

The Nottingham Forest Case


  • Nottingham Forest was promoted to the Premier League at the end of the 2021/2022 season.
  • As a new club the PSR limit of £105 million maximum loss over three years is reduced by £22 million for each year a club was not in the Premier League in three seasons prior. In the circumstances, the maximum permitted loss was £61 million (£105 million minus £44 million).
  • Nottingham Forest’s losses of £95.5 million therefore exceeded the maximum permitted loss by c.£34.5 million.
  • Nottingham Forest accepted there had been a breach but sought to reduce any sanction on the basis of six grounds of mitigation.


The Commission found that the breach of c.£34.5 million in excess of the limit was a significant breach.

In somewhat confusing terminology, there is a pre-starting point for a significant breach, of a three-point immediate sanction.

In the circumstances Nottingham Forest’s breach of c.£34.5 million was significantly greater than Everton’s of £19.5million. This represented an excess of 57% of the applicable threshold, compared to Everton’s which was 19% of its applicable threshold.

The true starting point before any mitigation would be considered was an immediate six-point deduction ([14.15] of the Nottingham Forest Commission Decision).

Of the six pleaded heads of mitigation all but one were rejected. The sole head of mitigation which was allowed was that of Nottingham Forest’s exceptional cooperation and ‘early plea’. The Commission were expressly asked by the Premier League to record the cooperation of Nottingham Forest as an example of what qualifies for exceptional cooperation.

Nottingham Forest has appealed the Commission’s determination to the Appeal Board. It appears that the Club’s main contention is that little or no consideration was given to the unique circumstances of the Club and its mitigation with the suggestion that it was at a disadvantage given it was the only promoted club not to receive parachute payments in recent years, and matters relating to sale of a prominent forward which secured a £47.5 million fee two months after the 30th June PSR deadline.

Comment and takeaway points

Both decisions provide a useful insight into regulating financial fair play at the elite level.

What is telling is the depth of analysis in both decisions (each spanning in excess of 50 pages). Whilst not binding on future commissions, a number of key takeaway points can be extrapolated, as already explored:

  1. The weight of mitigation – cooperation must be exceptional if it is to have any bearing on mitigation, this is particularly so given there is already an inbuilt obligation for clubs to cooperate and act in upmost good faith.
  2. A significant aggravating factor will always be the extent to which the club has exceeded the £105 million PSR limit.
  3. There is a general need to plan for contingencies, a defence of “something unexpected happened” will not be well received given the nature of the business is full of fluctuating risk to profitability (players being injured etc.)

The decisions further highlight the need for specialist legal and accounting input given the reliance on complex accounting rules and principles and procedures derived from both criminal and civil procedural law. No Premier League team can afford to suffer loss of points and clubs would be wise to ensure that they seek the necessary professional advice as early as possible.